Canadian payday loan provider Cash Store Financial Services Inc. is seeking protection from creditors as it faces liquidity woes resulting from the suspension of its right to offer loans in the province of Ontario, company officials reported Monday.
The Edmonton, Alberta-based company also said it voluntarily delisted its shares from the New York Stock Exchange as its share price had sunk and it could not meet the exchange's listing requirements.
Ontario's Registrar of Payday Loans last month said it would deny new licenses to the company because of conduct that included operating as an unlicensed payday lender. It also alleged the company charged more than a legal maximum of $21 for every $100 payday loan and that loans were not provided immediately to consumers.
Cash Store Financial's board subsequently determined that a proceeding under the Companies' Creditors Arrangement Act is the best way to carry on business and maximize value for stakeholders, company officials said.
Cash Store Financial has 510 branches across Canada under the banners "Cash Store Financial" and "Instaloans" and employs an estimated 2,000 people in the country. It also operates 27 branches in the United Kingdom. The company will remain open for business during the bankruptcy proceeding, company officials said.
The company recently was ordered to repay more than $1 million to customers after allegedly charging them exorbitant interest rates on payday loans and charging extra to load the loans onto debit cards.